Measuring Innovation: Beyond Revenue From New Products

Author:

Shapiro Amram R.1

Affiliation:

1. PRTM in Waltham, Massachusetts

Publisher

Informa UK Limited

Subject

Management of Technology and Innovation,Strategy and Management,General Engineering

Reference13 articles.

1. Oliver R. Smoot, or Ollie as he prefers to be called, was the shortest Lambda Chi Alpha pledge that October in 1958 when the “hack,” as MIT pranks are called, was performed. The measure became world famous and is found in many reference works and as part of the Google Calculator (using the standard smoot, or Ollie-based measure of 5′7″). The markings on the bridge are there still today, periodically renewed, and it is said the local police use smoot markings to call in locations on the bridge. As for “the ear,” reported sometimes as an ear and sometimes as epsilon, it is a fixed measure, equal to the earhole of a football helmet. As an invariable measure though of inferred length like the biblical cubit, it is somewhat less interesting for my purposes. Ollie Smoot has accomplished a good deal more than notoriety as a yardstick. He has been one of the leading champions of standards as president of the International Organization for Standardization (ISO). He has also served as chairman of the American National Standards Institute (ANSI). Although the notion of the smoot as a variable measure is a novel interpretation, it may have been prefigured in the following limerick by MIT alumnus Ken Estridge: There once was a student named Smoot Whose name you could find 'neath your boot. As you felt yourself freeze In the cold winter breeze You kept wishing he'd been half a smoot.

2. Kanter, Rosabeth Moss, Kao, John and Weirsema, Fred. 1997. Innovation Breakthrough Ideas at 3M, DuPont, GE, Pfizer and Rubbermaid. Harper Business. 3M shifted in the 1990s from longstanding targets of 25 percent of Revenue from New Products in five years to 30 percent in four (p. 55). Today, 3M has made another expectations shift with its “Acceleration Challenge” program, which targets doubling of new ideas reviewed and tripling of new products. Its New Product Introduction pipeline forecast, probability-adjusted, is now measured on a three-year basis. In 2005, it was reported to the analysts as having increased from $3.5 billion to $5.5 billion (presentation by Pat Campbell, 3M CFO to Morgan Stanley 2005 Basic Materials Conference, 2/23/05). As Clayton Christensen and others have pointed out, the market's “discounting” mechanism tends to make it hard to gain shareholder value benefit from pressing a position already demonstrated unless acceleration can be shown. The gradual upping of the “innovation ante” in 3M's targeting may reflect this need to not only be innovative but to show a pattern of increasing innovation.

3. Kanter, Rosabeth Moss, Kao, John and Weirsema, Fred. 1997. Innovation, Breakthrough Ideas at 3M, DuPont, GE, Pfizer and Rubbermaid. Harper Business. Another example of Revenue from New Products applied is found in the chapter on DuPont's application of the PACE® process: “In one of our businesses, revenue from new products has soared from 5 percent to more than 75 percent of the total, and the dollar amount has grown from $75 million to $450 million” (p. 86). As the driver of this new product revenue in this case was based on a new platform, this case study is one of true renewal.

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